Author Archives: Nick Moon

About Nick Moon

Nick Moon is a Certified Practising Accountant (CPA) and Registered Tax Agent with a Master of Professional Accounting, and the founder of Tax Serve, a CPA-led accounting and taxation firm based in North Lakes, Queensland, serving small businesses and individuals across Australia. Nick specialises in individual and business tax returns, small business tax planning, self-managed super funds (SMSF), BAS and GST compliance, and ATO obligations. Drawing on a background in business operations before entering the accounting profession, he provides advice that is both technically accurate and practical for real-world business situations. All Tax Serve content is reviewed for compliance with current ATO guidance and Australian tax legislation.

  1. Salary Packaging and Salary Sacrifice Australia 2025–26: How to Boost Your Take-Home Pay

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    Are you leaving money on the table every pay cycle? Salary packaging — also called salary sacrifice — is one of the most effective and ATO-approved strategies for Australian employees to reduce their taxable income and keep more of what they earn. Whether you work in healthcare, the not-for-profit sector, or a private company, understanding how salary packaging works in 2025–26 could make a meaningful difference to your finances.

    What Is Salary Packaging?

    Salary packaging is a formal arrangement between you and your employer where you agree to receive part of your remuneration as non-cash benefits instead of salary. Because those benefits are provided from your pre-tax income, you pay income tax on a lower salary — which means less tax withheld and more money in your pocket.

    The ATO recognises salary sacrifice as a legitimate tax strategy, provided the arrangement is set up correctly. The key rule: the agreement must be entered into before you perform the work, not after. Backdating or redirecting salary you’ve already earned doesn’t count — the ATO treats that as ordinary income and taxes it accordingly.

    How Does It Work in Practice?

    Here’s a simple example. Suppose you earn $100,000 a year and you salary sacrifice a work laptop worth $2,000 under an FBT-exempt arrangement:

    • Without packaging: You pay income tax on $100,000, then buy the laptop from your after-tax pay.
    • With packaging: Your taxable salary drops to $98,000. You save approximately $690 in income tax (at a ~34.5% effective marginal rate) — and the laptop is still yours.

    The savings grow significantly when you package higher-value items like superannuation contributions or a novated lease vehicle.

    What Can You Salary Sacrifice?

    Superannuation Contributions

    Salary sacrificing into super is one of the most popular strategies for Australians looking to build retirement savings while reducing their tax bill. Contributions made via salary sacrifice are taxed at just 15% inside your super fund — well below the 32.5%, 37%, or 45% marginal rates that apply to most working Australians.

    Important: From 1 July 2025, the Super Guarantee rate increased to 12%. Your employer must still pay SG on your full pre-sacrifice ordinary time earnings — they cannot use your salary-sacrificed super to offset their SG obligations.

    The concessional contributions cap for 2025–26 is $30,000 (including employer SG contributions). Exceeding this cap means the excess is taxed at your marginal rate.

    Novated Leases and Electric Vehicles

    A novated lease lets you finance a car and its running costs — fuel, registration, insurance, servicing — from your pre-tax salary through a three-way agreement between you, your employer, and a financier.

    The big news for 2025–26: battery electric vehicles (BEVs) and hydrogen fuel cell vehicles remain exempt from Fringe Benefits Tax (FBT), provided the car:

    • Carries fewer than nine passengers and a load under one tonne
    • Was first held and used on or after 1 July 2022
    • Has never been subject to Luxury Car Tax

    Running costs for eligible EVs — including home charging electricity — are also FBT-exempt. The ATO’s EV home charging rate is 5.47 cents per kilometre from 1 April 2026.

    Note on plug-in hybrids (PHEVs): As of 1 April 2025, PHEVs are generally no longer FBT-exempt. If you had a PHEV under an exempt arrangement before that date, grandfathering rules may apply — but any change to your lease terms, employer, or re-novation will end the exemption.

    Work-Related Items (Laptops, Phones, and More)

    Under section 58X of the Fringe Benefits Tax Assessment Act 1986, certain work-related items are completely FBT-exempt when provided primarily for employment use. Eligible items include:

    • Laptops and tablets
    • Mobile phones
    • Portable printers and GPS devices
    • Computer software
    • Protective clothing and tools of trade
    • Briefcases

    One item per FBT year rule: Most employees can only package one device of each type per FBT year. However, if your employer has an aggregated annual turnover under $50 million, this restriction doesn’t apply — multiple identical devices can be packaged in the same year.

    Meal Entertainment (NFP Sector)

    Employees of eligible not-for-profit organisations can package meal entertainment — restaurant meals, functions, and associated accommodation — up to a separate grossed-up cap of $5,000 per FBT year. Any amount above this rolls into the general FBT cap.

    Who Benefits Most from Salary Packaging?

    Not-for-Profit and Healthcare Workers

    If you work for a Public Benevolent Institution (PBI) — such as a hospital, aged care provider, or registered charity — you have access to the most generous packaging concessions in Australia:

    • PBIs and Health Promotion Charities: FBT-exempt benefits up to a $30,000 grossed-up cap per employee per year
    • Public and NFP Hospitals / Public Ambulance Services: FBT-exempt benefits up to a $17,000 grossed-up cap

    This means a nurse earning $80,000 at a public hospital could package up to $9,010 in living expenses (the pre-grossed-up equivalent of $17,000) completely free of FBT — a substantial tax saving.

    Private Sector Employees

    Private sector workers don’t have access to the same FBT-exempt caps, but can still benefit significantly through:

    • Salary sacrificing into superannuation (always tax-effective)
    • Packaging FBT-exempt work-related items (laptops, phones)
    • Novated leases on eligible electric vehicles

    Understanding Reportable Fringe Benefits (RFBA)

    If the total taxable value of your packaged benefits exceeds $2,000 in an FBT year (1 April to 31 March), your employer must report a Reportable Fringe Benefits Amount (RFBA) on your income statement. The RFBA is calculated as your taxable benefit value multiplied by 1.8868 — so a $2,000 taxable benefit generates a minimum RFBA of $3,773.

    The RFBA is not directly taxed, but it is added to your income for certain government tests. A higher RFBA can affect:

    • HELP/VET Student Loan repayments — your compulsory repayment threshold may be reached sooner
    • Family Tax Benefit and Child Care Subsidy — your adjusted income may reduce entitlements
    • Medicare Levy Surcharge — you may cross the income threshold for the surcharge
    • Division 293 tax — high-income earners may face additional super tax

    Always model the full impact of packaging before committing, especially if you have a HELP debt or receive family payments.

    Common Salary Packaging Mistakes to Avoid

    • Signing agreements retrospectively: The arrangement must be in place before you earn the income — not after.
    • Double-dipping on deductions: You cannot claim a personal tax deduction for expenses already paid through salary sacrifice.
    • Ignoring RFBA impacts: Packaging can reduce your take-home tax but increase your adjusted income for government benefit tests.
    • Modifying grandfathered PHEV leases: Any change to a pre-1 April 2025 PHEV arrangement will end the FBT exemption.
    • Exceeding NFP caps: Benefits above the $30,000 or $17,000 grossed-up cap attract 47% FBT — budget carefully.
    • Breaching the one-device rule: Packaging two laptops in one FBT year (for employers with turnover over $50 million) creates an FBT liability.

    Employer Compliance Checklist

    If you’re an employer offering salary packaging, make sure you:

    • Maintain written, prospective agreements for every participating employee
    • Report correctly under STP Phase 2 — use Type S (super) and Type O (other benefits) salary sacrifice codes
    • Calculate Super Guarantee on pre-sacrifice OTE — not the reduced post-sacrifice salary
    • Track FBT caps and RFBA across the full FBT year (1 April to 31 March)
    • Lodge your FBT return by 21 May (or 25 June if lodging through a tax agent)

    Make the Most of Salary Packaging in 2025–26

    Salary packaging is a powerful, ATO-endorsed tool — but it works best when it’s tailored to your individual circumstances. The right mix of benefits depends on your income, employer type, family situation, HELP debt, and financial goals.

    Ready to find out how much you could save? The team at TaxServe Australia specialises in helping employees and employers structure compliant, tax-effective salary packaging arrangements. Contact us today for a personalised review — and start keeping more of your hard-earned income.

    Sources

  2. Tax Deductions for Sole Traders in Australia: What You Can Claim in 2025–26

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    Running your own business as a sole trader gives you freedom and flexibility — but it also means navigating Australia’s tax system largely on your own. The good news? The Australian Taxation Office (ATO) allows sole traders to claim a wide range of deductions that can significantly reduce your taxable income. The key is knowing what qualifies, how to calculate it correctly, and what records to keep.

    With the 2025–26 tax return season now open, here’s your practical guide to maximising your deductions — and staying on the right side of the ATO.

    The Golden Rule: Business vs. Private

    Before diving into specific categories, every sole trader needs to understand the fundamental test the ATO applies to every deduction claim:

    Was the expense incurred in carrying on your business or earning assessable income?

    If the answer is yes, it’s generally deductible. If the expense is private or domestic — or a mix of both — you can only claim the business portion. And critically, you need evidence to prove it.

    A bank statement alone is rarely enough. The ATO expects invoices, receipts, and supporting calculations that show the supplier, what was purchased, the amount, and the date.

    Home Office and Home-Based Business Expenses

    Millions of Australian sole traders work from home, at least part of the time. The ATO recognises two types of home-based costs: running expenses and occupancy expenses.

    Running Expenses

    Running expenses cover the additional costs of working from home — electricity, gas, phone and internet use, stationery, and the decline in value of office equipment and furniture.

    For 2025–26, you can use the fixed-rate method of 70 cents per hour for every actual hour you work from home. This rate covers energy, phone, internet, stationery, and computer consumables in one simple calculation. You don’t need a dedicated home office to use it — but you do need a contemporaneous record of every hour worked from home (not an estimate).

    Important: If you use the fixed rate, you cannot separately claim the costs it already covers. However, you can still claim the decline in value of computers, desks, and chairs separately, as these are not included in the 70-cent rate.

    Alternatively, the actual-cost method lets you calculate the precise business portion of each expense. This requires bills, receipts, and a reasonable usage calculation — such as a diary showing your pattern of business and private use.

    Occupancy Expenses

    Occupancy expenses — rent, mortgage interest, council rates, land tax, and home insurance — are only deductible where part of your home has the character of a place of business. This generally means an area that is clearly identifiable for business use, not suitable for ordinary private use, and used exclusively or almost exclusively for business (or regularly used for client visits).

    A word of caution: Claiming occupancy expenses can affect your main-residence capital gains tax (CGT) exemption when you sell the property. This is a significant consequence that warrants careful consideration — and professional advice.

    Vehicle and Car Expenses

    If you use a car for business purposes, you can claim the business portion of your vehicle costs. The ATO offers two methods for a qualifying car (a vehicle designed to carry fewer than nine passengers and less than one tonne):

    Cents-Per-Kilometre Method

    The 2025–26 rate is 88 cents per business kilometre, capped at 5,000 kilometres per car. This rate is all-inclusive — it covers fuel, registration, insurance, servicing, repairs, and depreciation. You cannot claim any of these costs separately if you use this method.

    You don’t need a formal logbook, but you do need records showing how you calculated your business kilometres.

    Logbook Method

    The logbook method applies your vehicle’s business-use percentage to actual expenses. You’ll need a logbook covering a continuous 12-week period, plus odometer readings at the start and end of each income year. A valid logbook can be used for up to five years if your usage pattern remains representative.

    For 2025–26, the car cost limit for depreciation is $69,674. If your car cost more than this, the depreciation deduction is capped at that amount.

    Note: Ordinary home-to-work travel is private and not deductible — even if you work from home. Travel must have a genuine business purpose to be claimed.

    Equipment, Tools, and the Instant Asset Write-Off

    Computers, tools, office furniture, and other business equipment may be deductible — but the timing depends on the cost and the applicable depreciation rules.

    For 2025–26, eligible small businesses with aggregated annual turnover below $10 million can immediately deduct the business portion of an eligible asset costing less than $20,000 under the instant asset write-off. The asset must be first used or installed ready for use between 1 July 2025 and 30 June 2026.

    Assets costing $20,000 or more are not eligible for an immediate write-off. Instead, they go into the small-business depreciation pool, with deductions at 15% in the first year and 30% in subsequent years.

    Remember: you can only claim the business-use portion of any asset. If you use a laptop 60% for business and 40% personally, you can only claim 60% of its cost or depreciation.

    Professional Development and Self-Education

    Investing in your skills is often tax-deductible — but only if the education maintains or improves skills used in your current business activities, or is likely to increase your income from those existing activities.

    Deductible costs can include:

    • Course fees and seminar registrations
    • Textbooks, journals, and study materials
    • Eligible internet use for study
    • Travel to attend courses
    • Decline in value of study equipment

    What’s not deductible: Education that prepares you for a new career or a different profession. Also note that FEE-HELP and VET Student Loan repayments are never deductible, even where the underlying course fees are. The former $250 reduction for self-education expenses no longer applies — it was removed from 1 July 2022, so the full eligible amount is deductible for 2025–26.

    Insurance Premiums

    Business insurance — such as public liability and professional indemnity premiums — is generally deductible as a business operating expense, provided the policy relates to carrying on your business.

    Income protection insurance is treated differently. Premiums that protect against loss of income are deductible, but they’re claimed under Other deductions in your individual tax return — not as a business expense. And if you receive a benefit payment, it’s assessable income.

    Life insurance, trauma cover, and critical-care policies are not deductible. If you have a combined policy, only the identifiable income-protection component can be claimed.

    Personal Superannuation Contributions

    As a sole trader, you’re not required to pay superannuation guarantee for yourself — but you can make personal contributions and claim them as a deduction. This is one of the most powerful tax strategies available to self-employed Australians.

    For 2025–26, the concessional contributions cap is $30,000 (including any employer or salary-sacrifice contributions). If your total super balance was below $500,000 on 30 June 2025, you may also be able to carry forward unused cap amounts from up to five previous financial years.

    Critical steps to claim the deduction:

    1. Make the contribution to a complying super fund before 30 June 2026.
    2. Lodge a valid notice of intent to claim with your fund.
    3. Receive written acknowledgment from the fund.
    4. Claim the deduction in the Personal super contributions section of your individual tax return — not as a business expense.

    Miss any of these steps and you lose the deduction. Don’t leave this to the last minute.

    Record-Keeping: The Foundation of Every Claim

    The ATO requires you to keep records for at least five years from the date you lodge your return. Records can be paper or electronic, but must be in English (or readily translatable) and clearly explain each transaction.

    Key records to maintain:

    • Invoices and receipts for all business expenses
    • Home-working hours log and utility evidence
    • Vehicle logbook and odometer readings (if using the logbook method)
    • Floor-area calculations for home occupancy claims
    • Asset purchase records and business-use calculations
    • Course records showing the connection to your current business activities
    • Super fund acknowledgments of your notice of intent

    The ATO’s free myDeductions tool (in the ATO app) can help you track income and expenses throughout the year — making tax time much simpler.

    Common Mistakes to Avoid

    The ATO actively monitors sole-trader returns and flags common errors. Watch out for:

    • Claiming 100% of mixed-use costs without evidence of the business portion
    • Double-claiming phone, internet, or energy costs already covered by the 70-cent home rate
    • Separately claiming fuel or depreciation after using the cents-per-kilometre method
    • Treating every equipment purchase as immediately deductible — check the $20,000 threshold
    • Claiming occupancy expenses without establishing a genuine place of business
    • Deducting training for a new career rather than your current business
    • Recording personal super contributions as a business expense — they belong in a different section
    • Claiming super without the fund’s acknowledgment of your notice of intent

    Sources

    Ready to Maximise Your Sole Trader Deductions?

    Navigating sole-trader tax deductions can be complex — and getting it wrong can mean either leaving money on the table or attracting unwanted ATO attention. At TaxServe Australia, our experienced tax professionals work with sole traders and self-employed Australians every day to ensure you claim every deduction you’re entitled to, with the right records to back it up.

    Contact TaxServe Australia today to book a consultation and make the most of your 2025–26 tax return. We’re here to take the stress out of tax time — so you can focus on running your business.

  3. Motor Vehicle Tax Deductions Australia 2025–26: What You Can Claim This Tax Time

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    Key Takeaways

    • The 2025–26 cents per kilometre rate is 88 cents — capped at 5,000 kilometres per car.
    • There are two methods for individual taxpayers: cents per kilometre and logbook.
    • Ordinary home-to-work commuting is not deductible — even if you work unusual hours.
    • The depreciation car limit for 2025–26 is $69,674.
    • Small businesses with turnover under $10 million can instantly write off eligible assets costing less than $20,000.
    • Plug-in hybrid EVs (PHEVs) generally lost their FBT exemption from 1 April 2025.

    Introduction

    With the 2025–26 tax return season now open, motor vehicle expenses are one of the most commonly claimed — and most frequently scrutinised — deductions on Australian tax returns. Whether you’re an employee who drives between job sites, a sole trader using your car for business, or an employer providing vehicles to staff, the rules are specific and the ATO is watching.

    Getting your car deduction right means understanding which method applies to you, what trips actually qualify, and what records you need to back up your claim. This guide covers everything you need to know for your 2025–26 return.

    Who Can Claim Car Expenses?

    For ATO purposes, a car is a motor-powered road vehicle — including petrol, diesel, hybrid, plug-in hybrid or battery-electric — designed to carry fewer than nine passengers and a load of less than one tonne.

    Employees and individual business taxpayers (including sole traders and individual partners in a partnership) can use the two standard car-expense methods, provided they own, lease, or hold the car under a hire-purchase agreement. If your car is provided through salary sacrifice or a novated lease, you generally cannot claim personal running costs — the employer handles the tax treatment through FBT.

    Important: Motorcycles, scooters, utes designed to carry one tonne or more, and vehicles with nine or more passenger seats are not cars under these rules. You may still claim work-related costs for these vehicles, but you must use actual expenses and records — not the standard car methods.

    The Two Methods for 2025–26

    1. Cents Per Kilometre Method

    The 2025–26 rate is 88 cents per kilometre, capped at 5,000 kilometres per car. This gives a maximum calculation of $4,400 — but that is not an automatic deduction. You must be able to demonstrate how you calculated your eligible kilometres.

    The rate covers all running costs, including:

    • Fuel or electricity
    • Registration and insurance
    • Servicing, repairs and maintenance
    • Decline in value (depreciation)

    This means you cannot claim these costs separately on top of your cents per kilometre claim. You also cannot add an instant asset write-off for the same car.

    Records required: You don’t need receipts for individual expenses, but you do need evidence of your work-related kilometres — diary entries, calendar records, trip logs, or the ATO’s myDeductions app all work.

    Note: The 91 cents per kilometre rate applies from 1 July 2026 (the 2026–27 year). Do not use this rate on your 2025–26 return.

    2. Logbook Method

    The logbook method lets you claim the work-related percentage of your actual car expenses. If your logbook shows 65% business use, you can claim 65% of fuel, insurance, registration, servicing, interest on a car loan, and depreciation.

    Logbook requirements:

    • Must cover a continuous 12-week period representative of your annual travel pattern
    • Each trip entry must include: date, start and end odometer readings, kilometres travelled, and a meaningful description of the business purpose (not just “business”)
    • A valid logbook lasts five years, but you must record odometer readings at the start and end of every income year you use it
    • If your travel pattern has changed significantly, you’ll need a new logbook

    Records required: Receipts and invoices for all actual expenses claimed, plus the logbook and odometer records.

    What Trips Are Deductible?

    This is where many taxpayers go wrong. The ATO distinguishes between travel that is part of performing your work duties and travel that merely gets you to work.

    Deductible trips include:

    • Driving from your regular workplace to a client, supplier or work site
    • Travelling directly between two separate workplaces
    • Driving during the working day to perform employment or business duties

    Not deductible:

    • Ordinary travel between home and your regular workplace — this is private travel, regardless of how far you live, whether you work unusual hours, or whether public transport is unavailable
    • Carrying a laptop or minor work items does not make a commute deductible

    Limited exceptions apply where:

    • Your home is genuinely a base of employment and work duties begin there
    • You must transport essential, bulky equipment that cannot be securely stored at your workplace
    • Your work is genuinely itinerant, with no fixed workplace

    These exceptions are fact-specific. If you’re unsure whether your travel qualifies, speak with a registered tax agent before lodging.

    Business Vehicles: Depreciation and the Instant Asset Write-Off

    The Car Depreciation Limit

    For 2025–26, the depreciation cost limit for passenger cars is $69,674. If your car costs more than this, depreciation is calculated on $69,674 — not the actual purchase price. This is a depreciation cap, not a general write-off threshold.

    Small Business Instant Asset Write-Off

    If your business has aggregated annual turnover below $10 million and you use the simplified depreciation rules, you may be able to immediately deduct the business-use portion of an eligible asset costing less than $20,000.

    Key rules:

    • The threshold is strictly less than $20,000 — an asset costing exactly $20,000 does not qualify
    • The asset must be first used or installed ready for use by 30 June 2026
    • For passenger cars, the depreciation car limit ($69,674) applies first — meaning most cars will not qualify for the instant write-off and instead enter the small business pool

    Assets costing $20,000 or more go into the small business pool and are deducted at 15% in the year of addition and 30% in later years.

    Employer-Provided Vehicles and FBT

    If your business provides a car to an employee (including a director) that is available for private use — including home-to-work travel — a car fringe benefit may arise. This is an employer obligation, separate from the employee’s income tax return.

    The FBT rate for the year ending 31 March 2026 is 47%. Employers can value the benefit using:

    1. Statutory formula method — generally 20% of the car’s base value, adjusted for days available for private use
    2. Operating cost method — actual operating costs multiplied by the private-use percentage (requires a valid logbook)

    Common FBT mistakes to avoid:

    • Assuming utes and dual-cab vehicles are automatically exempt (they’re not always)
    • Treating home-to-work commuting as business travel
    • Using an invalid or vague logbook
    • Failing to lodge an FBT return because you assumed no liability existed

    Electric Vehicle FBT Exemption

    Battery-electric and hydrogen fuel-cell cars provided to employees may be exempt from FBT where:

    • The vehicle meets the ATO car definition
    • It was first held and used on or after 1 July 2022
    • It has never been subject to luxury car tax

    Important: Even exempt EVs must be reported. If the notional taxable value exceeds $2,000 in the FBT year, the grossed-up amount must appear on the employee’s payment summary.

    PHEVs: Plug-in hybrid electric vehicles generally lost their FBT exemption from 1 April 2025. Grandfathering may apply where a binding financial commitment existed before that date, but any change to the arrangement — including a new employer or broken novation — can end eligibility.

    Common Mistakes That Attract ATO Attention

    The ATO actively reviews motor vehicle claims. Watch out for these red flags:

    • Using the 2026–27 rate (91 cents) on a 2025–26 return
    • Treating the 5,000 km cap as an automatic entitlement without evidence
    • Claiming fuel, repairs or depreciation on top of a cents per kilometre claim
    • Claiming ordinary home-to-work commuting
    • Using car methods for a motorcycle or heavy vehicle
    • Relying on a vague or unrepresentative logbook
    • Claiming an instant write-off for an asset costing $20,000 or more
    • Assuming employer-provided EVs require no FBT reporting

    Sources

    Need Help Claiming Car Expenses? Contact TaxServe Australia

    Motor vehicle deductions are one of the most common areas where Australians either miss legitimate claims or overclaim and attract ATO scrutiny. Getting it right requires understanding which method suits your situation, what records you need, and how the rules apply to your specific circumstances.

    TaxServe Australia’s registered tax agents can help you:

    • Choose the right car expense method for your 2025–26 return
    • Review your logbook and ensure it meets ATO requirements
    • Maximise legitimate deductions for business vehicle use
    • Advise employers on FBT obligations for company cars and EVs

    📞 Contact TaxServe Australia today for a consultation and make sure your motor vehicle claims are accurate, compliant, and maximised for 2025–26.

    Get in touch with TaxServe Australia →

  4. Superannuation Guarantee Changes 2026–27: What Every Australian Employer Must Know Now

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    Key Takeaways

    • The Superannuation Guarantee (SG) rate remains at 12% for 2026–27.
    • Payday Super is now law: employers must pay SG within 7 business days of each employee’s payday — not quarterly.
    • The ATO’s free Small Business Superannuation Clearing House (SBSCH) was retired on 30 June 2026.
    • The Super Guarantee Charge (SGC) has been redesigned — the ATO now issues assessments directly using Single Touch Payroll (STP) data.
    • A transitional compliance leniency period applies for 2026–27 for employers making a genuine effort to adapt.

    Introduction

    The 1st of July 2026 marked a watershed moment for Australian employers. While the Superannuation Guarantee rate holds steady at 12%, the way you pay super has fundamentally changed. The federal government’s “Payday Super” reform — part of the Securing Australians’ Superannuation package — has replaced the old quarterly payment cycle with a new obligation tied directly to each employee’s payday.

    For business owners and payroll managers, this is not a minor administrative tweak. It requires updated payroll systems, new workflows, and a clear understanding of the penalties for getting it wrong. This guide breaks down everything you need to know to stay compliant in 2026–27.

    What Is Payday Super and Why Does It Matter?

    Under the old system, employers had until the 28th day after the end of each quarter to pay super contributions. That meant employees could wait up to three months before their super hit their fund — and in the meantime, those funds weren’t earning investment returns.

    The Payday Super reform changes this entirely. From 1 July 2026, super contributions must be received by the employee’s super fund within 7 business days of each payday. The government estimates approximately 8.9 million Australian employees will benefit from earlier super payments and reduced instances of unpaid super.

    The New Payment Deadlines

    Situation Deadline
    Standard pay run 7 business days after payday
    New employee or new fund 20 business days after first payday
    Natural disaster or major IT outage 20 business days (ATO determination required)

    The key word here is received — the contribution must clear into the employee’s fund account within the deadline, not just be sent.

    The SG Rate: Still 12% in 2026–27

    Good news for employers: the Superannuation Guarantee rate remains at 12% for the 2026–27 financial year. This rate applies to an employee’s “qualifying earnings,” which includes:

    • Ordinary Time Earnings (OTE)
    • Commissions (including those earned outside ordinary hours)
    • Amounts salary sacrificed into superannuation

    The Maximum Contribution Base

    Employers are not required to pay SG on earnings above the Maximum Contribution Base (MCB), which is $270,830 per annum for 2026–27. Under Payday Super, you’ll need to monitor each employee’s year-to-date earnings and stop SG contributions once this threshold is reached.

    Salary Sacrifice: What’s Changed (and What Hasn’t)

    Salary sacrifice arrangements remain a popular way for employees to boost their super, and they continue to work under the new system — but with important rules:

    • Employer SG obligations are not reduced by salary sacrifice. You must still calculate the 12% SG on the employee’s pre-sacrifice earnings.
    • Salary sacrificed super amounts are reported via STP as “Salary sacrifice type S” and count toward the employee’s concessional contributions cap ($30,000 for 2026–27).
    • These sacrificed amounts are treated as additional employer contributions and cannot be used to offset your minimum SG requirement.

    The SBSCH Is Gone: What Employers Must Do Now

    One of the most immediate operational changes for small businesses is the permanent closure of the ATO’s Small Business Superannuation Clearing House (SBSCH) on 30 June 2026. If your business relied on this free service to batch super payments, you must now use one of the following alternatives:

    1. Commercial payroll software with integrated super payment functionality (e.g., Xero, MYOB, QuickBooks)
    2. A third-party clearing house (many banks and payroll providers offer these)
    3. Direct payments to each employee’s super fund

    Ensure your chosen solution is fully compliant with STP Phase 2 reporting requirements, as the ATO now uses STP data to monitor super obligations in near real-time.

    The New Super Guarantee Charge (SGC): How Penalties Work

    If you miss the 7-business-day deadline, you become liable for the Super Guarantee Charge (SGC). The process has changed significantly:

    • The ATO now proactively identifies shortfalls using STP data and issues a notice of assessment directly to you — you no longer need to self-assess and lodge an SGC statement.
    • The SGC now includes: the SG shortfall amount, daily compounding interest from the day after the due date, a $20 administrative fee per employee per quarter, and an administrative uplift of up to 60% of the shortfall.
    • The SGC amount is now tax-deductible (though additional penalties for late payment of the SGC are not).

    Director Liability

    Company directors should be aware that Director Penalty Notices (DPNs) can make you personally liable for your company’s unpaid SGC debt. This is a serious risk that should not be underestimated.

    ATO’s Transitional Approach for 2026–27

    Recognising the scale of this transition, the ATO has published Practical Compliance Guideline PCG 2026/1, confirming a compliance leniency period for the 2026–27 financial year. Employers who are genuinely trying to adapt will not face ATO enforcement action for minor issues, provided they:

    • Attempt to make timely payments for each pay run
    • Correct any payment issues (e.g., rejected contributions) as soon as reasonably practicable

    However, employers who fail to correct unpaid amounts within 28 days after the end of the relevant quarter will be deemed high-risk and may face enforcement action.

    Your Payday Super Compliance Checklist

    • ✅ Update your payroll software to handle payday-aligned super payments and STP Phase 2 reporting
    • ✅ Choose a replacement for the SBSCH if you previously used it
    • ✅ Review salary sacrifice arrangements to ensure SG is calculated on pre-sacrifice earnings
    • ✅ Monitor the Maximum Contribution Base ($270,830) for high-earning employees
    • ✅ Maintain records for 5 years showing how SG was calculated and evidence of timely payment
    • ✅ Review employee onboarding to ensure choice of fund and stapled fund rules are followed

    Sources

    Need Help Navigating Payday Super? Contact TaxServe Australia

    The shift to Payday Super is one of the most significant changes to hit Australian employers in years. Getting it right from day one is critical — the penalties for non-compliance are real, and the ATO’s new data-matching capabilities mean shortfalls will be identified faster than ever before.

    TaxServe Australia’s team of registered tax agents and business advisers can help you:

    • Review and update your payroll processes for Payday Super compliance
    • Select the right clearing house or payroll software solution
    • Understand your obligations around salary sacrifice and the Maximum Contribution Base
    • Respond to ATO SGC assessments or notices

    📞 Contact TaxServe Australia today for a consultation and make sure your business is fully compliant with the new superannuation rules for 2026–27.

    Get in touch with TaxServe Australia →

  5. ATO Audit Triggers in Australia: What Raises Red Flags in 2025–26

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    Key Takeaways

    • The ATO uses data-matching and AI to cross-check returns against banks, crypto exchanges, digital platforms and government agencies.
    • The most common audit triggers are high work-related deductions, undeclared income, rental property claims and round-number figures.
    • Keep records for at least five years and only claim what you can substantiate to reduce audit risk.
    • Using a Registered Tax Agent lowers your risk of errors and gives you a later lodgement deadline.

    Introduction

    With the 2025–26 financial year drawing to a close, millions of Australians are preparing to lodge their tax returns — and the Australian Taxation Office (ATO) is watching more closely than ever. Powered by sophisticated data analytics and a vast network of third-party data sources, the ATO processes over 600 million transactions annually to identify discrepancies between what taxpayers report and what the agency already knows.

    Understanding what triggers an ATO audit or review is not about gaming the system — it’s about lodging correctly, keeping proper records, and avoiding costly mistakes. Here’s what the ATO is focused on in 2025–26 and how you can protect yourself.

    How the ATO Finds You: Data-Matching and AI

    The ATO’s compliance engine is far more powerful than most taxpayers realise. Through its data-matching program, the ATO collects information from:

    • Banks and financial institutions — interest, dividends, and loan accounts
    • State and territory rental bond authorities and land registries — rental income and property ownership
    • Digital platforms — ride-sourcing and short-term accommodation providers (like Airbnb) are legally required to report payments under the Sharing Economy Reporting Regime (SERR)
    • Cryptocurrency exchanges — client and transaction data from designated crypto service providers
    • Insurance providers — data on luxury vehicles, marine vessels, and aircraft to identify wealth inconsistent with reported income
    • Government agencies — federal and state payments, grants, and benefits

    This data is fed into risk-profiling models that flag returns with unusual patterns. The ATO has also integrated artificial intelligence into its online lodgment systems, delivering real-time “nudges” to taxpayers when a claim looks out of step with their occupation or income level — before they even hit submit.

    Top ATO Audit Triggers for Individuals in 2025–26

    1. Work-Related Expenses (WRE)

    Australians claimed approximately $31 billion in work-related deductions in 2024–25, making this the ATO’s single biggest compliance focus. The ATO’s three golden rules apply to every claim: you must have spent the money yourself, it must directly relate to earning your income, and you must have a record to prove it.

    Key red flags include:
    • Claiming the same amount as the previous year without reviewing actual expenses
    • Incorrect working-from-home calculations — the revised fixed rate for 2025–26 is 70 cents per hour, and you must keep a full-year record of actual hours worked (not just a four-week sample)
    • Misunderstanding the $300 threshold — this is a substantiation threshold, not a free pass. If your total WRE claims exceed $300, you need written evidence for the entire amount

    2. Rental Property Claims

    The ATO has stated that nine out of ten rental property owners make errors in their tax returns. Common mistakes that trigger scrutiny include:

    • Repairs vs. capital improvements: Claiming a renovation or initial repairs on a newly purchased property as an immediate deduction. Capital works must be depreciated over time
    • Apportionment errors: Failing to correctly split expenses for holiday homes used partly for private purposes, or properties not genuinely available for rent at market rates
    • Interest claims: Claiming interest on the portion of a loan used for private purposes

    3. Cryptocurrency and Digital Assets

    The ATO treats crypto as an asset, not currency. Every disposal — selling, swapping, gifting, or using crypto to buy goods — is a Capital Gains Tax (CGT) event that must be reported. The ATO actively matches data from crypto exchanges against lodged returns, so omissions are increasingly easy to detect.

    4. Side Hustles and Sharing Economy Income

    Income from platforms like Uber, Airbnb, Airtasker, and eBay is taxable. The Sharing Economy Reporting Regime means the ATO receives this data directly from platforms. If you earn income from a side hustle and don’t declare it, the mismatch will likely be flagged.

    Top ATO Audit Triggers for Small Businesses in 2025–26

    1. The Shadow Economy

    The ATO estimates that cash-in-hand and unreported income accounts for approximately 60% of the small business income tax gap. Businesses that deal predominantly in cash, pay staff off the books, or fail to report all sales are a primary enforcement target.

    2. Division 7A and Trust Integrity

    For privately owned businesses and family groups, the ATO is closely scrutinising:

    • Division 7A: Unreported loans to shareholders or associates, failure to make minimum yearly repayments on complying loans, and the personal use of company assets without proper accounting
    • Trust distributions: Complex arrangements where distributions are made to lower-taxed beneficiaries but the economic benefit flows elsewhere — known as Section 100A reimbursement agreements

    3. GST, BAS, and Payroll Obligations

    The ATO is increasingly firm on core business obligations. Businesses with a history of late lodgment or non-payment may be moved to monthly GST reporting. Critically, the Director Penalty Notice (DPN) regime makes company directors personally liable for unpaid PAYG withholding, GST, and superannuation. If a company fails to report these liabilities within three months of the due date, the penalties become “lockdown” — meaning they cannot be remitted even through insolvency.

    What Happens During an ATO Audit?

    An ATO inquiry typically begins with a risk review — a targeted examination of a specific issue. If concerns escalate, it may become a full audit. The process generally involves:

    1. Notification — The ATO contacts you or your tax agent, outlining the scope and information required
    2. Information gathering — You provide relevant records; the ATO has formal powers to compel document production if needed
    3. Position paper — The ATO outlines its findings and proposed adjustments, giving you an opportunity to respond
    4. Assessment — If discrepancies are confirmed, an amended notice of assessment is issued

    You have the right to lodge a formal objection if you disagree with an ATO decision. Disputes can also be resolved through the ATO’s in-house facilitation service or escalated to the Administrative Review Tribunal (ART) or Federal Court.

    How to Reduce Your Audit Risk

    • Keep meticulous records — contemporaneous receipts, diaries, logbooks, and bank statements for all income and expenses
    • Wait before lodging — don’t rush to lodge on 1 July. Wait until late July for the ATO to pre-fill your return with employer, bank, and government data
    • Benchmark your claims — ensure your deductions are reasonable for your occupation and income level
    • Apportion private use honestly — document the business vs. private split for phone, internet, car, and any shared assets
    • Separate business and personal finances — especially critical for company directors and trust beneficiaries
    • Engage a registered tax agent — professional advice reduces errors and ensures you’re claiming correctly

    Final Thoughts

    The ATO’s compliance capabilities have never been more sophisticated. Data-matching, AI-driven nudges, and targeted enforcement programs mean that errors and omissions are increasingly difficult to hide — and increasingly costly when discovered. The best protection is simple: claim what you’re entitled to, keep the records to prove it, and seek professional advice when in doubt.

    Contact TaxServe Australia

    Concerned about your tax position or want to ensure your 2025–26 return is lodged correctly? Contact TaxServe Australia today for a confidential consultation with our experienced tax professionals. Whether you’re an individual taxpayer, property investor, or small business owner, we’ll help you navigate the ATO’s compliance landscape with confidence — and keep you on the right side of the law.

    Sources

    1. Australian Taxation Office — Tax time 2025: what we’re focusing on
    2. Australian Taxation Office — Data matching programs
    3. Australian Taxation Office — Rental properties
    4. Australian Taxation Office — Crypto asset investments
    5. Australian Taxation Office — Sharing economy reporting regime
    6. Australian Taxation Office — Small business and privately owned groups compliance
    7. CPA Australia — ATO compliance focus areas 2025–26
    8. Australian Taxation Office — Director penalty notices

  6. How to Lodge Your 2025–26 Tax Return in Australia: Deadlines, Documents & What’s New

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    Key Takeaways

    • Self-lodgers must lodge by 31 October 2026; clients of a Registered Tax Agent generally have until 15 May 2027.
    • You must register with a tax agent before 31 October to access the extended deadline.
    • Gather income statements, bank interest, dividends, private health details and expense receipts before lodging.
    • Tax agent fees are tax deductible in the following year.

    Introduction

    The end of the 2025–26 financial year is almost here — and that means tax return season is just around the corner. Whether you’re a salaried employee, a sole trader, a property investor, or a share market enthusiast, lodging your annual income tax return correctly and on time is one of the most important financial tasks of the year.

    But with changing rules, new ATO guidance, and the temptation to lodge early, it’s easy to make costly mistakes. This guide covers everything you need to know to lodge your 2025–26 tax return smoothly, accurately, and on time.

    Key Lodgement Deadlines for 2025–26

    The first thing to know is your deadline — and it depends on how you lodge.

    Self-Lodgers (myTax)

    If you prepare and lodge your own tax return using the ATO’s free myTax platform, your deadline is 31 October 2026. If that date falls on a weekend, the due date shifts to the next business day.

    Clients of a Registered Tax Agent

    If you use a registered tax agent, you can access extended lodgement deadlines — often as late as 15 May 2027 for most individual clients. However, there’s a critical catch: you must be registered with your tax agent before 31 October 2026 to be included in their lodgement program.

    Some clients face earlier deadlines:

    • 31 October 2026 — if you had outstanding prior-year returns as of 30 June 2025
    • 31 March 2027 — if your most recent return resulted in a tax liability of $20,000 or more

    If you’re unsure which deadline applies to you, speak to your tax agent now — before the October cut-off.

    myTax vs. Registered Tax Agent: Which Is Right for You?

    The ATO’s myTax platform is free, available 24/7 from 1 July, and uses pre-fill data to automatically populate much of your return. It’s a great option if your tax affairs are straightforward — for example, if you earn a salary, have some bank interest, and claim standard work-related deductions.

    However, a registered tax agent is worth considering if you have:

    • Rental property income or capital gains
    • Business or sole trader income
    • Trust or partnership distributions
    • Foreign income or complex investments
    • A history of ATO reviews or amendments

    Tax agent fees are generally tax-deductible, and a good agent can identify deductions and offsets you might otherwise miss — often saving you more than the cost of their fee.

    When to Lodge: Don’t Rush In

    One of the most common mistakes Australians make is lodging their tax return too early. The ATO strongly advises waiting until late July before lodging, because that’s when most pre-fill data from employers, banks, and health funds is complete.

    The key signal to look for: your employer’s income statement should be marked ‘Tax ready’ in myGov before you lodge. If you lodge before this happens, you may need to amend your return later — which creates extra work and potential delays to your refund.

    Note: Some data arrives even later. Information from Taxable Payments Annual Reports (TPAR) — relevant to many contractors and subcontractors — is generally not available until after 28 August 2026.

    Documents and Records to Gather

    Good record-keeping is the foundation of a smooth tax return. In most cases, you must keep records for five years from the date you lodge. Here’s what to gather:

    Income Records

    • Income statements from your employer (available via myGov)
    • Government payments from Centrelink or the Department of Veterans’ Affairs
    • Bank interest statements from all financial institutions
    • Dividend statements from shares you own
    • Rental income records — all rent received and a full list of expenses
    • Business income records if you’re a sole trader
    • Capital gains information — from property, shares, or cryptocurrency sales

    Deduction Records

    • Work-related expenses — receipts for tools, equipment, uniforms, professional subscriptions
    • Car expenses — logbook or kilometres record for work-related travel
    • Working from home — diary of hours worked from home, plus utility bills
    • Self-education — receipts for course fees and study materials
    • Charitable donations — receipts from registered charities
    • Tax agent fees from the previous year

    Tip: If your total work-related claims exceed $300, you must have written evidence (receipts or invoices) for every expense — not just bank statements.

    The ATO’s myDeductions tool in the ATO app is a handy way to store receipts and track expenses digitally throughout the year.

    What’s New for the 2025–26 Tax Return

    Several important changes apply to this year’s return:

    Non-Deductible Interest Charges

    From 1 July 2025, individuals can no longer claim a tax deduction for General Interest Charge (GIC) or Shortfall Interest Charge (SIC) imposed by the ATO. If you’ve been claiming these in previous years, note that this deduction is no longer available.

    Rental Property Guidance

    The ATO has issued new rulings clarifying the tax treatment of rental properties — including rules for short-term rentals, how to apportion expenses for properties with mixed private and rental use, and holiday home rules. If you own an investment property, review these updates carefully.

    Trust Reporting Improvements

    The ATO is introducing new labels on trust tax returns to better capture distribution data. This will flow through to the pre-fill service for individual beneficiaries — making it easier to report trust income accurately.

    What Does NOT Apply Yet

    The ATO has confirmed that several widely discussed proposals do not apply to the 2025–26 return:

    • The proposed $1,000 standard deduction for work-related expenses (proposed from 1 July 2026)
    • The Working Australians Tax Offset
    • Changes to Capital Gains Tax or negative gearing rules

    Common Mistakes to Avoid

    • Lodging too early before pre-fill data is finalised
    • Claiming deductions without records — bank statements alone are not enough
    • Forgetting to apportion expenses used for both work and private purposes
    • Claiming home-to-work travel — this is private travel and is generally not deductible
    • Failing to declare all income — including side hustles, sharing economy income, and crypto gains

    What Happens After You Lodge?

    Once you submit your return, the ATO processes it and issues a Notice of Assessment (NOA). Processing times are approximately:

    • Online (myTax): ~2 weeks (10 business days)
    • Paper return: ~10 weeks (50 business days)

    You can track your return’s progress in real time via ATO online services through myGov.

    If you’re owed a refund, it will be deposited directly into your nominated bank account — so make sure your details are up to date. If you have a tax bill, your NOA will state the amount and due date (typically 21 November 2026 for self-lodgers who file on time).

    Penalties for Late Lodgement

    Missing the lodgement deadline can result in a Failure to Lodge (FTL) penalty — calculated at one penalty unit for every 28-day period the return is overdue, up to a maximum of five penalty units. The ATO generally doesn’t apply penalties for isolated late lodgements that result in a refund or nil balance, but persistent non-compliance can lead to firmer action.

    If you receive a penalty, you can request remission — particularly if the delay was caused by circumstances outside your control, such as illness or a natural disaster.

    Get Your 2025–26 Tax Return Right — With TaxServe Australia

    Tax time doesn’t have to be stressful. With the right preparation and the right advice, you can lodge confidently, claim everything you’re entitled to, and avoid the mistakes that trigger ATO reviews.

    At TaxServe Australia, our experienced tax professionals help individuals, sole traders, and small business owners navigate every aspect of their tax return — from gathering the right documents to maximising legitimate deductions and meeting every deadline.

    Contact TaxServe Australia today to book your 2025–26 tax return appointment. Don’t leave it to the last minute — our calendar fills up fast during tax season.

    Sources

    1. Australian Taxation Office — Key dates for individuals
    2. Australian Taxation Office — How to lodge your tax return
    3. Australian Taxation Office — Lodge your tax return online with myTax
    4. Australian Taxation Office — Pre-fill availability
    5. Australian Taxation Office — What’s new for individuals
    6. Australian Taxation Office — Failure to lodge on time penalty
    7. CPA Australia — Changes in store for 2025 tax time